• Login
    View Item 
    •   WU IR Home
    • Colleges, Departments, and Organizations
    • School of Business
    • Kaw Valley Bank Working Paper Series
    • View Item
    •   WU IR Home
    • Colleges, Departments, and Organizations
    • School of Business
    • Kaw Valley Bank Working Paper Series
    • View Item
    JavaScript is disabled for your browser. Some features of this site may not work without it.

    SEO Valuation and Insider Manipulation of R&D

    Thumbnail
    View/Open
    209.pdf (11.34Mb)
    Author
    Walker, Rosemary
    Kwak, Sungkyu
    Hull, Robert M.
    Publisher
    Washburn University. School of Business
    Sponsor
    Kaw Valley Bank
    Date
    September 2015
    Metadata
    Show full item record
    Abstract
    We examine a sample of 674 SEOs from 1999-2010 where reduced R&D spending is significantly associated with the lowering of insider ownership proportions. With this association established, we derive an R&D manipulation variable measuring underinvestment in R&D. We add to the SEO - R&D literature by examining the relation between R&D underinvestment and common stock valuation around SEOs. In contrast to the IPO research, we do not find that underinvestment in R&D leads to greater SEO stock valuations during the offer price setting process. Like the IPO research, we find that underinvestment in R&D leads to lower stock valuations for short-run post-offering tests. In contrast to the long-run IPO results, we find a significant association between R&D manipulation and stock valuation for long-run post-offering tests where underinvestment in R&D is associated with lower stock valuations. We also find the five percent owner group for SEOs is important in explaining R&D manipulation and discover that underpricing for SEOs is not related to R&D manipulation. These latter two findings are different from IPOs. In conclusion, SEOs can be quite different from IPOs when examining the association between the insider manipulation of R&D and stock valuation.
    URI
    https://wuir.washburn.edu/handle/10425/282
    Collections
    • Faculty Papers
    • Kaw Valley Bank Working Paper Series

    Browse

    All of WU IRCommunities & CollectionsBy Submit DateAuthorsTitlesSubjectsThis CollectionBy Submit DateAuthorsTitlesSubjects

    My Account

    LoginRegister

    DSpace software copyright © 2002-2023  DuraSpace
    Contact Us | Send Feedback
    DSpace Express is a service operated by 
    Atmire NV